The Supreme Court’s findings in the car finance commission payments case centred on transparency, fairness and consumer protection, with key conclusions outlined below:
1. Discretionary Commission Models Were Unfair
The Court found that finance agreements allowing dealers to set interest rates—and earn more commission by increasing those rates—were inherently unfair if not properly disclosed to the customer. This “discretionary commission arrangement” created a conflict of interest that was not transparent.
2. Breach of Duty to Disclose Commission
Lenders and brokers (dealers) had a duty to clearly disclose both the existence and nature of the commission. The Court ruled that failing to explain that dealers could vary interest rates for their own financial benefit amounted to a breach of legal obligations to the consumer.
3. Impact on Informed Decision-Making
By not disclosing the commission structure, customers were unable to make an informed choice. The Court held that this undermined consumer trust and contradicted the principles of fairness set out under the Consumer Credit Act 1974 and related case law.
4. Lenders Are Liable
Importantly, the ruling confirmed that lenders – not just dealers – could be held liable for failing to ensure commission arrangements were properly disclosed, even if they didn’t directly interact with the customer.
